The rating outlook remains stable, reflecting our expectation that
Valeant's debt leverage will remain above 7x over the next two years,
though the company will continue to generate substantial free cash flow
(aided by a low tax rate).

The affirmations follow Valeant's announcement that it will issue $1 billion
in new eight-year senior secured notes to repay a total of $1 billion in
senior unsecured debt from three issues maturing in 2020. Although we view the
transaction as a modest credit positive, given the longer pro forma maturity
profile, we continue to expect leverage to exceed 7x in 2017 and 2018 and the
company to generate over $500 million in discretionary cash flow annually.
Moreover, while we view Valeant's substantial scale and revenue diversity
favorably, the company faces very high exposure to patent losses over the next
two years, and we believe its product pipeline is insufficient to offset
revenue and EBITDA declines in the next 12-18 months. This is despite our
belief that the company has a very diverse product portfolio, with limited
therapeutic concentration and only one drug, Xifaxan, a treatment for
irritable bowel syndrome, accounting for more than 10% of revenues.
The stable rating outlook reflects our expectation that Valeant's debt
leverage will remain above 7x over the next two years though the company will
continue to generate substantial free cash flow (aided by a low tax rate). The
outlook hinges on the company's ability to demonstrate a sustainable
trajectory of positive growth in profitability, excluding the impact of the
significant patent expirations in 2017 and 2018. This would require the
company to continue to grow its more successful franchises, including its
Bausch & Lomb segment and Xifaxan